From bailouts to a better capitalism
Posted by jembendell on September 26, 2008
What do you think about the current financial crisis? Im focusing on this topic in the next issue of the Journal of Corporate Citizenship, so would welcome your thoughts…
A bailout of any banks using public funds should only occur in return for those banks agreeing to act more explicitly in the public interest in concrete ways.
Thus, participating banks must have to agree to:
a) ensure no reduction of banking facilities provided to the general public in the next year and seek to reach more unbanked from disadvantaged communities
b) suspend all potential bonuses for the current year, and roll these into a new bonus system based on performance over 4 years, which must not total more than an equivalent of double a salary during that period
c) within one year complete and publish a carbon audit on all investments and loans, and a plan to reduce the carbon profile of investments and loans through shifting their portfolio or engaging the management of those investments or debtors
d) provide an equity stake for the government to ensure that if toxic assets do not recover their value that the government has some share of the banks other assets
e) pay more tax in the country they are headquartered if their global profits increase, no matter where those profits are booked
f) sign up to the UN Principle on Responsible Investment (UNPRI) to learn how to be a more socially progressive financial institution.
Then, in the longer run, we need to plan and facilitate a slow transition to a more balanced global financial system, one that: curbs all speculation; limits shortselling and derivatives; moves back from fair value accounting to a more concrete assessment of assets; deals with the problem that all money enters the economy as debt which necessitates unsustainable rates of economic growth and bubbles; creates new duties of responsibility on bearers of private property rights (both financial and non financial); does not let a financial institution become so large that it can either manipulate the system or threaten the system if it gets into trouble; achieves more tax harmonisation across national jurisdictions.